Saturday, July 18, 2009

As the Sun sets...

We bid adieu to Sun Microsystems and recognize the Draft Specification is now one year of age.  I can say with out much reservation that it has, and will be, the most difficult thing that I have done in my life. Taking better then a year to write and the result of seven years of university and thirty years of experience in oil and gas, at 50 you know there is not that much gas left in the tank. My father always said that your 40's are the time in which you can do anything. Your are mentally, physically, spiritually and intellectually at your life's peak, and I feel that is the case with me. After a little more then a year since publication, this past year has been more about recovery and recharge then anything else.

I look back on the 17 years in which I started working to develop oil and gas systems; with amazement that I was able to get the job done. For much of that time I was driven to do something that I did not know specifically what it was. Searching and hunting for something to satisfy an unknown. When I originally saw what it was that I could do, it was May 1992. In a flash the idea came to me and I was driven to make it real. 

For many of those days it seemed to me like I was locked in a darken room where I needed to find the exit. Being constantly reminded of the obstacles, dangers and pressures which frustrated the journey. I needed to find the way for those that would follow. Rising above the day to day grind never made any sense. The counter intuitive and seemingly destructive decisions to pursue this project alienated and confused most. But I always knew whatever the result I was reaching for, I could achieve that vision of so many years before. 

Today I look back on these times as the best part of my life. The struggle is the prize and this journey has produced a new "way" for the oil and gas industry. I am pleased with the results of this effort and will continue to make the project real. Writing here about the compelling reasons why the industry should adopt the Draft Specification. Recruiting the people needed to take it to the next level. And joining those people who will solve the problems we face in meeting the demands for energy. 

For people who have similar feelings and opportunities. Those with the desire to do something that they know is above and beyond them. Preparation is the difference between success and failure. It is academic whether you will do it or not. You really have no choice. I think preparation needs two very important ingredients. A Master's level education will help in defining and building the many contradiction and conflicts that arise. Secondly a physical depth brought about by high levels of competition in sports. Your system will be taxed and the stress will kill you. I've suffered 4 bouts of Pneumonia in the past 6 years and I know that if I was not as fit as I once was when I went into this process, let's just say the stress is super human. But more importantly the physical competition shows you that there is nothing but your mind that limits your potential. 

I am honored to lead this project. I am rested and fully recovered and look forward to the next 17 years. When we look at what has been done and compare it to what needs to be done, little has been achieved. I am reminded of Ray Kurzweil's Law of Accelerating Returns about how things get done. Very slowly at first, and then they pick up their own momentum. According to Google, 861 people have looked at the Draft Specification. When we think that People, Ideas & Objects is about obscure oil and gas ERP systems, I think this number shows these ideas have a community of like minded people. Please join us here

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Thursday, July 16, 2009

99.9986% uptime.

Yesterday I lost the final two hours of work on a post I was writing. Frustrating yes, but that is the first "loss" of work in 2 full years. I'm talking about the use of Google Apps for our domain (www.people-ideas-objects.com). I was writing when suddenly my browser failed and I had to restart it. And as a result, when I logged back in the file did not reflect the last two hours of work. It was the same as I had left it the day before. For whatever reason during that two hours the browser would register my edits, but not write them to the file on Google's servers. Either one of these two technologies, the browser or Google Docs failed for that period of time. 

I am also partially at fault for not doing a hard save on the file during that two hour period. I rely almost exclusively on Google Docs picking up all of my saves and have become overly reliant on these automatic saves. 

Now Google Docs is just one product of the suite of applications that are available. These other applications are used extensively and maybe should be factored in when I determine Google's up-time percentage. Then there is that price. At $50.00 per user per year, this is the deal of the century.
I also have to mention the costs and risks of maintaining our own environment. I don't think in the past two years we would have had the same up-time. Probably not even close. And that doesn't factor in any of the heavy costs of servers, bandwidth and applications. Therefore mark me down as a very satisfied Google Apps user. 

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Monday, July 13, 2009

China's energy consumption

Rebecca Wilder has one of the most interesting blogs on the Internet. Her passion for economics, writing and prolific chart production provide unique insight and perspectives on the economy. She recently published this graph that I think identifies one of the most difficult issues we will face in the next few years.

The problem of course is the future demand for energy. China's consumption is already amongst the highest in the world. This is evidence demand will continue on a rather aggressive trajectory for the next few decades.

The energy industry is ill prepared to meet this challenge. That is what this software development project is about. Preparing, by first organizing, the producers to address this challenge. Organizing around the Joint Operating Committee, the legal, financial, cultural, communicative, and operational decision making framework of the global oil and gas industry. Building the software to define, align and support the People, Ideas & Objects of an innovative energy industry.  

If we leave the problem in the hands of the bureaucracy we will continue to fail. Please join us here

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Sunday, July 12, 2009

Google O/S and NeatX

This announcement almost went under the radar. Sometimes the complexity of the technologies make it difficult to see the whole picture. Information about Google's recently announced Operating System (Google Chrome) received significant attention, not so for Neatx. Which is interesting because the two applications combine to introduce a new product architecture. I'll leave it to the MSM to provide the information on the O/S. Neatx is the real jewel in this new product / architectural offering. To me this product offering shows Google is serious about both the consumer and enterprise marketplace in terms of offerings.


We need to go back to the last two Google related posts I've written about. Google Wave is a revolutionary communication related product. The second technology I recently wrote about was Google Chrome (The Browser), their open source browser. Recall I thought that the technology would enable the user to have a constant browser experience available from any public or private terminal. 

In a networked world the users needs are unquantifiable. They can and will include every possible permutation and combination. The other known attribute of the users demands is that the volume of data and information will continue to grow exponentially. Having this environment available all the time and anywhere becomes a challenge for the technology. As I wrote about in the Google Chrome (Browser) post; the constant, consistent web browser interface, complete with all the users unique and authenticated access available by simply logging into the users account through a Google Chrome browser. 

This feature may not seem to be a strong feature to the average web consumer. However, in my opinion, from an enterprise point of view it is a necessity. The problem with this implementation is that it is relegated to the browser. If Cloud Computing does take off it will need a more robust operating environment in which to ensure its users and companies are able to rely upon. That is where Google Chrome the O/S and Google Neatx come in to play. 

Neatx is an open source product that Google has in development and will be offering. Based on the "old" X Windows architectural model of computing, Neatx leverages Google Chrome the O/S in ways noted in my Google Chrome (Browser) post. The difference is the level of security and control, unlimited application access, file systems, any and all compiler access, and the single sign on environment available anywhere on any machine. In other words the entire network capability, unlimited and unconstrained by any hardware, software or network related issue. The fact that Google is calling both the browser and the O/S "Chrome" is probably indicative of the disappearance of the "Browser" metaphor. And, this environment becoming systemic or embedded within the O/S with the classic Google / Apple ease of use. 

People, Ideas & Objects is founded on a Technical Vision that includes four cornerstone technologies. I see these technologies Java, Asynchronous Process Management, Wireless and IPv6 changing the technical landscape in the next few years. The scenario I see developing for Users of People, Ideas & Objects. (And yes this imputes that Google Chrome (the O/S) and Neatx will be added to the Draft Specification.) Is a User has at their disposal all manner of computing resources necessary to complete their work supporting the innovative oil and gas producer. Users making their clients the most profitable in terms of their commercial operations. 

Logging into their systems the User will have at their disposal the complete People, Ideas & Objects applications. Applications that they have influenced in terms of what they need and want from an ERP system. In addition, the software development capability that is a core competitive advantage of People, Ideas & Objects offerings. A software development capability where the applications will evolve based on User input. 

Once the user is logged in, they will be able to see their session presented just as it was when they last logged out. No matter what machine they have logged in from. From there they may be logged into a variety of network resources that provide the full scope of functionality needed to do their job. If they need a monthly report they like to run for their clients they can run it from any machine they may be on. The fact that it takes 15 hours of processing time is irrelevant to the Netbook they are using. Access to People, Ideas & Objects provides the processing power that will complete the 15 hour job in the next 15 seconds, and the User can continue to provide their producer client with the innovative and valuable report that they developed. This architecture is designed to provide a better understanding of the opportunities and issues the producers have at each Joint Operating Committee. 

Physical location will become irrelevant in this virtual environment. And due to the Asynchronous Process Management that is a cornerstone of the Technical Vision, time will be of less significance then it is today. Gone will be the pressures of deadlines and 9 to 5. In its place will be an active and innovative member of the Joint Operating Committee providing the commercial transaction processing, analysis and evaluation of the issues of that JOC. An individual who is trained in their craft of Geology, Engineering, Accounting or Administration and is proactive and innovative. 

In this scenario People, Ideas & Objects becomes more then just an application. And more the cornerstone of a loose grouping of modules that create the Users commercial environment. A commercial environment that provides the User with access to the People they need to do their job. An environment in which they apply their skills and earn their income. 
Please join us here in making this vision real. 

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Thursday, July 09, 2009

"Industry in a box."

It's 1992 all over again. I find myself in the position where I have a good handle on the needs and understanding of the energy industry. And I stumble into the previously unfavorable position where Oracle Corp is making statements and announcing product architectures that resonate with me. And that is the bad part. Not that Oracle technology is not the best, it is, and I find they are sailing closest to the wind in terms of the market offerings and future architectures. 

The problem for me is that Oracle and I have had business dealings before. In early 1997 Oracle executed a coup against its global Independent Service Providers that was of questionable strategic and tactical value. It is doubtful in my mind that Oracle has changed its way's. With their pending acquisition of Sun Microsystems they seem to be an imposing figure on our horizon. We need to decide how to capture the best value for our clients, the oil and gas producers.

The comment "Industry in a Box" is attributed to Larry Ellison who is the founder, Chairman and majority owner of Oracle. The comment was made in a Forbes article "Questioning Oracle's Cloud" where it is asked if Oracle's commitment to cloud computing is consistent with its current application offerings. 

Irrespective of Oracle's application offerings, People, Ideas & Objects Draft Specification details the needs of an innovative oil and gas producer. None of the current Oracle application offerings are needed to augment the software development capability that People, Ideas & Objects offers the oil and gas producer. Leading one to realize that Oracle is as much of a direct competitor as it is a technology provider. I think it was this same conflict that lead Oracle to make the decision to become an application provider at the expense of its Independent Software Vendors in 1997. 

The point of the article is Ellison's comment. It accurately captures the value proposition that People, Ideas & Objects offers the oil and gas producer. A value proposition based on the understanding that the innovative producer will have it's asset base, geological and engineering capabilities as its primary competitive advantage. Owning and operating computer hardware and software that provides the back office functions does not provide any competitive value. 

Go through an energy companies career listings and see the detailed description of an IT job they are looking to fill. Painful. The "Industry in a box" for oil and gas is consistent with the competitive advantages and value proposition noted here. A centralized, secure, virtual capability providing the producer with the most profitable means of oil and gas operations. Please join us here.

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Tuesday, July 07, 2009

McKinsey, Bryan and Rumelt Part lll

This is the third and final installment of the McKinsey Quarterlies podcasts from Lowell Bryan and Richard Rumelt. I have taken the two previous podcasts and applied them to the work that is being done in People, Ideas & Objects. In Part l the authors noted the current tendency to think that clear sailing is the normal or optimal operating environment. As they were able to clearly communicate, clear sailing avoids the risks and dangers that need to be addressed in the economy. In Part ll they relate to the "markets" magic healing powers that preclude anyone or company from taking any action or responsibility. Noting the tendency for people to suggest that the bigger problems are not their responsibility, and the market will take care of it.


Part lll takes the conversation to the operating strategies that people can use to optimize their future. Change is happening at a remarkable rate. Much of the change is being forced upon us as a result of the failures brought on by too much clear sailing. Information Technology plays a big part of how I see we rebuild our economy.

It is also interesting to note the level of discussion that is taking place regarding the role of government in the economy. Some interesting points of view are here, here and here. I would also turn your attention to Professor Carlota Perez' earlier work this decade. She was instrumental in predicting the scope and scale of our economic collapse. And how this period of economic renewal is a constant in our economy for over the past 300 years. One of her very pertinent points was the role of government would need to be "redefined" in an innovative and creative manner. 

I have thought about her point of a new role for government for the past number of years. Particularly from the point of view of this software development project. Software defines and supports the organization. We currently see social networks coming into play with the power of connecting like minded people. Software defines and supports not just organizations, but society as well. Just as roads, bridges, communications and infrastructure fall in the jurisdiction of the government. Software as infrastructure provides value to all that live within the society by reducing the shared costs of living in that society, and enabling access for personal and commercial purposes. I think governments need to realize this enhanced role in the new economy.

With that preamble in mind I turn to the document at hand. Bryan and Rumelt note;
If we look ahead a bit, you can see the health care system we have, if we extend it to a larger group of the population, or everybody lets say, its going to bankrupt us, so something is going to give. The strategist is someone who has an idea about what is going to give or about reshaping it. That's how your going to create value. 
This project is about a strategy of how to rebuild the oil and gas industry. An industry which is beginning to show the failures of clear sailing. The current motivation and ability to approach the new science and engineering basis of the innovative oil and gas producer is in question. I am not predicting the future, only suggesting that research shows the Joint Operating Committee provides the appropriate posture for an innovative organization. We must move to the JOC as our opportunity for the future. 

The future lies in the collective hands of the user group that defines, uses and controls this software development. User driven software development is the only method that can assure what the authors say should be the proper posture.
How to prepare to be resilient and flexible no matter how this environment turns out. 
and
Fortune favors the prepared mind.
Soon the economy will force the hands of the people who are now working in the oil and gas industry. People, Ideas & Objects will be here for those people who know the bureaucracies days are over. It doesn't require a lot of vision to see the bureaucracy can't and won't make the transition to the future.
You have to find a wave of change that you can exploit and ride it with skill. Its not about having lockstep plans, its about figuring out which forces we can harness or ride to our benefit. 
Please join us here.

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Monday, June 29, 2009

McKinsey Bryan and Rumelt Part ll

In the second audio installment of this series. Bryan and Rumelt discuss the U.S. government's approach to the economic crisis. Their discussion provides a sound basis of looking at the situation we are in, and provides an understanding of the problems and solutions. The final three paragraph of this discussion captures the issue better then I have seen anywhere else.
Milton Friedman, when he studied the Great Depression, had a very interesting take. Everyone thinks of Milton Friedman as this big free-markets guy. But his explanation of the Great Depression was that the Federal Reserve didn’t do its job.
And his explanation of why the Federal Reserve didn’t do its job is interesting. What he says is, the New York banks used to self-regulate themselves when there were credit crunches and runs on the banks. They would get together, and they would more or less agree, “Here are the rules. Here’s how we’re going to handle this crisis.” He said once the Federal Reserve came into being, they stopped doing that. They sort of expected that the Federal Reserve would do it.
And so the institutions and the habits, the whole structure of that self-regulation went into disrepair. Then when the crisis hit in 1929, 1930, that institutional framework didn’t exist, and then the Federal Reserve sat on its hands. And I think something like that is also a way of looking at what’s happened recently. Wall Street could have self-regulated, but it chose not to. And Washington chose not to. And so no sober adult was in charge of these things.
Coming at this problem at a slightly different angle, so much is expected of the "market" to solve these bigger problems. When regulators think that it is their role to avoid the problems. It eliminates the need for the companies to involve themselves of the larger issues. Ask an oil and gas company today what responsibility they have in meeting the market demands for energy? Or, should they allow the service industry to deal with the complete cut-off of funds and force them to cannibalize their operations again? The answer you'll get back is that these are not my problems, the market will figure it out. And as a result we go through another period where we will have to rebuild the service industries to meet the needs of the producers. 

In the Resource Marketplace, and Research & Capabilities Modules of the Draft Specification. I attempt to resolve this situation. By providing the producers, represented in the JOC, with a window on the service industries. Giving the producers a means in which to have the innovations and developments of the earth science and engineering disciplines be extended through to the service industries. Extending the producers organization in a manner that could eliminate the feast or famine cycle they induce in the service industry. Just because the producer receives 100% of the proceeds from oil and gas sales. Does not entitle them to expect the service industry will source all of their capital and ideas from elsewhere. They form too critical a part of the industry to hold them ransom each time their is problem at the producer level. 

In a recent article in the Financial Post that reflects the final resolution of ignoring the larger issues. Henry Sykes, President of MGM Energy Corp in Calgary talking about the delays in the Mackenzie Valley Pipeline says;
"This is an embarrassment to the country -- this project, the regulatory system … and yet nothing is happening," Mr. Sykes said in an interview."While I remain optimistic that there will eventually be a pipeline, I have given up predicting timing. Between the regulatory process and the fiscal negotiations, I think this has taken far too long.
If you agree the industry needs to begin to deal with these types of issues. That there are larger unaddressed issues to be resolved, please join us here.

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Sunday, June 28, 2009

McKinsey: Bryan and Rumelt, Part l

It is astonishing to me the pace and depth of research and articles that McKinsey are producing in this current economic crisis. And in suggesting that the scope is limited to the current crisis would be short selling the leadership that McKinsey have provided since at least 2005. I began writing this blog at the end of that year and have published 54 other McKinsey article reviews since. All of these being of the highest quality of input that I have been able to find.  

UCLA Professor Lowell Bryan and McKinsey Director Richard Rumelt talk about the strategies needed to address these financial difficulties. And in the introduction it is noted as to how we found ourselves in this financial crisis. 
Factors that lead executives to take huge unsecured risks. Including the separation of risk and rewards and too much managing by the numbers. 
Definitely on topic, and when an article starts off with the comment;
Dramatic failure of management and governance. 
I'm sold. The commentators introduce a metaphor for what they see today by drawing on experiences in the development and operation of the Hindenburg. One of the authors had the opportunity to discuss with an individual who rode across the Atlantic on the Hindenburg. Noting the individual marvelled at the smooth nature of the ride. Which of course it did until it crashed. The point being that the viewing of irrelevant statistics, such as the Hindenburg's smooth ride, miss the level and type of risks of that mode of transportation being inherently dangerous. Management at the manufacturer of the Hindenburg noted that the crash would be someone else's problem. 

In oil and gas I have written about the disjointed nature of the industry in this blog. Running the Pig series which highlights 4 local producers who have declining reserves and production, yet at the height of their folly they had assigned themselves $3.6 billion "in the money" stock options. 

Yet there is a larger issue at play in the industry, and this article is directly on point when it mentions the Hindenburg's management suggesting the crash was someone else's problem. Oil and gas production in the world is not growing. We've known that since 2005, and may indeed be in the early years of an advanced decline. Energy is the oxygen used to power our economies, without it we are all dead. Yet my daily interaction with oil and gas managers reflects that this is not deemed as their fault. That is someone else's problem. 

Asking difficult question like "what are we doing" vs reflecting on irrelevant results are some of the points made in the McKinsey article. They also point out the disconnect between management and ownership and reference Adam Smith's agency theory. These points are exactly why I believe the two sources of revenues for this software development project are the oil and gas investors themselves and the governments that have royalties as part of their income. 

The last point I want to make in this first edition of the McKinsey article is around the 8:10 point in the audio. A comment is made that people don't know where they are going
... and they haven't got a business model and strategy for where they are going, they have a strategy and business model for smooth sailing. 
I believe the future successful producer will have to move from the banking mentality of predictable returns to an innovative stance based on the underlying science and engineering of the industry. My research shows that using the Joint Operating Committee provides the appropriate stance for the innovation and science to iterate within the commercial environment of an oil and gas producer. These are some of the attributes that are captured in the Draft Specification

Finally, the 1700's in England saw 6 million people living in poverty and sickness. In 1850 England had 24 million people living in prosperity. This contrast is the effect that the industrial revolution had on the quality of life. Recall that Professor Ludwig von Mises says the industrial revolution was the solution to the problems of society. I think it is reasonable to assume that today's problems, and particularly the problems that McKinsey notes in this article, will be the problems that are solved through the Information Technology revolution. Please join us here

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Tuesday, June 23, 2009

Hagel & Brown, Shift Index.

Tonight I am in possession of an interesting paper that I'll evaluate in a future post. I felt it best that I point out this new paper so that others could get an early view of it as well. John Seely Brown and John Hagel are two authors that I covered in the Preliminary Research Report. There work is in the area of Web Services and its impact on business. 
The topic of the paper is the development of an index called the "Shift Index". I'll leave you with a quotation from Professor Scott Page who wrote the Forward.  
The Shift Index can be thought of as a new economy analog of the Composite Index of Leading Indicators, an old economy index that considers hours worked, unemployment applications, orders for capital goods, new building permits and the like. The Composite Index has its place, but its indicators don’t respond until months if not years into a shift. Walk through an innovation sequence: Bandwidth increases creating space for new social media. Entrepreneurs formulate ideas. Venture capitalists finance projects. Proposals prove viable. Finally, mezzanine funding spurs a ramp up in employment. Only then, in this last stage, does the Composite Index identify the shift. Using the Composite Index to track shifts is like driving a car by staring into the rear-view mirror. In contrast, the Shift Index lets us look out the front windshield. 
As important as the index may prove for strategic applications, it may have more impact in how it changes our conception of the economy. Interpreted through the lens of neoclassical economics, the Shift Index captures shifts in fundamentals, particularly on the cost side where technological changes allow firms to do more with less. But, the Shift Index, by name alone, calls into question the neoclassical mindset that focuses on re-equilibration.
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Saturday, June 20, 2009

Jeroen van der Veer

We stand at the early dawn of a new energy future.
Comments such as this coming from the retiring CEO of Royal Dutch Shell are welcome and refreshing news to this community. We have a job to do and as van der Veer mentions a difficult one. Approaching these types of problems based on the way we do business today is going to leave us disappointed. Energy is reputed to be the second most complex industry to the space industry. As we increase the level of complexity and risk it is reasonable to assume the organizational methods should change. Particularly when we have Information Technologies as advanced and as mature as they are today. 
Indeed, fossil fuels, coal, oil and natural gas, will continue to provide more than half the world’s energy in 2050. 
This fact alone will require a tremendous volume of capital to discover, develop and produce these oil and gas resources. I don't think capital of this magnitude can be sourced from the traditional capital or debt markets. The resources necessary to fuel the industry will have to come from the prices these resources command in the marketplace. Price will therefore be the mechanism for rewarding innovative oil and gas producers.

Therefore we are challenged in transforming the oil and gas infrastructure and operations to a new competitive footing. One in which innovation is the key method of developing value. From the bureaucracies that have served us well in the past century, I can not foresee this challenge being met. I would argue that today's prices are reflecting that we are falling behind as a result of the organizational performance of the bureaucracy.

To help make this transition, interested people are invited to join this community. People who are working within the industry that know there is a better way in which to do their jobs. Taking the Draft Specification and adding to it the detail that is necessary for the global oil and gas industry to operate on the People, Ideas & Objects system. The community that forms here will be the beginnings of how the software gets built. And more importantly the Community of Independent Service Providers will provide the innovative oil and gas producer with the most profitable means to manage their operations.

Nonetheless, whatever the reality of our industry will look like. More energy will be needed to fuel the future. Energy is critical to our economic survival. And van der Veer reflects on the challenge ahead.
A growing population and higher standards of living for billions of people in the developing world will mean that we need all available sources of energy to keep the world’s economies humming. So, while the world races to build up alternative fuels, it must also find new sources of fossil fuels, including unconventional ones, such as oil sands.
Please join us here.

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Wednesday, June 17, 2009

May you live in interesting times.

Based on those charts of the Council of Foreign Relations the economy is in very bad shape, but if the economy can't source its energy needs, it will be far worse. A key aspect of this project has always included a strong element of industry renewal. The bureaucracy expired in its effectiveness and was the basis of my research into alternative organizational methods. In May 2004 I wrote the Preliminary Research Report which suggested the bureaucracy be replaced with the industry standard Joint Operating Committee as the key organizational construct of the innovative oil and gas producer. 

We see a number of producers cutting back on their production, particularly a number of North American gas producers. Cutting back on production is a serious action that I have not seen before in my lifetime, but a welcome development. Pricing of energy has become a critical part of a producers tactical approach to the business. As the referenced article suggests, the oversupply of natural gas is leading to a collapse of natural gas pricing. Having a system such as People, Ideas & Objects considers this scenario in the Draft Specification

Reducing production is an operational decision that has to meet the majority voting requirements of the Joint Operating Committee. What I have suggested is that there be a predetermined point where prices would invoke a percentage decline in production. This being done in an automated fashion based on the Technical Vision of this software development project. A reduction in production that is pre-approved by the JOC to ensure that the costs do not exceed the revenues of the property. A strategy that optimizes the reserves of the property for maximum return over the life of the field. Yes, game theory being incorporated in these decisions. 
  
Today we also have the alternative sources of energy that were to have replaced "dirty" oil and gas, fading into their appropriate and irrelevant posture. Time is of the essence and we have little slack time in which to deal with the decline in reserves, production and development of our long term sources of oil and gas. Action is necessary or we jeopardize our quality of life by leaving it in the hands of these bureaucracies. Please join us here

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Tuesday, June 16, 2009

Council on Foreign Relations on the e...

The Council on Foreign Relations publishes a Quarterly update on the Economy. Their June 5, 2009 update is entitled "The Recession in Historical Context." If anyone was thinking our economic situation was just another recession, they should read this report. It consists of nine pages and 22 graphs comparing the average post-WWII recession, the average pre-WWII recession, the Great Depression and the current economic climate. These variables are framed by the 4 preceding years before the recessions, and continue through for the 4 years after the recessions started. Data includes the mean and the out lying range of values and is consistent throughout the graphs, rich in information and quite frightening. Have a look.

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Sunday, June 14, 2009

Vicente Fox on leadership.

Former Mexican President Vicente Fox was in Calgary to make a speech about the demands of the energy industry. In the process of identifying the issue, he make the perfect recommendation for the formation of this community. 
Former Mexican president Vicente Fox called for an energy "super-body" that goes beyond politics, ideologies and business interests to help create a unified global approach to the industry.
This can't involve just one person. It has to be a broad and diverse group of people that are able to take the necessary actions and make the necessary decisions. A community of people who are concerned about the future of our global economy. An economy that is dependent on a stable and secure supply of energy. Fox notes;
"(There are) too many interests, too many diverse positions, too many sources of information, What I would love to see is a leader . . . somebody should bring in some order into the conducting of the issue of energy in the future," he said in an interview before his speech. "I don't see that happening in energy."
According to Fox, assembling the talent of leaders, researchers, think-tanks and universities would help create a common purpose: "Getting energy to its optimum in the future so that energy fuels economies of the world, and so that economies of the world, being successful, fuel jobs and fuel opportunities for people."
Please join us here.

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Wednesday, June 10, 2009

Interesting comments on Open Source

Open source software development provides solutions to the majority of the issues the business brings. Open source is the method of software development for People, Ideas & Objects. The value is attained through different groups seeing advantages from different perspectives. From a developer point of view, I found this series of quotes from a developer on the Google Chromium blog
With the release of Mac Chrome to the dev-channel, I wanted to talk about open source and expectations. What was the point of releasing at this stage, you might ask? It's clearly not finished. Clearly. It's missing a large number of features, some half implemented, others not at all. Why even bother? Doesn't it just make us look bad? 
Open source projects aren't simply about a runnable binary, they're about the community of users, testers, and developers who devote their time and skills to working on a product they believe in. They go hand in hand: there's no binary without the community and there's no community without the binary. At some point in the life-cycle of a project, you have to stop thinking solely about your small band of developers and start growing the larger supporting community that will become your users, testers, localizers, documentation writers, and possibly even new coders.
In "The Cathedral and the Bazaar", Eric Raymond writes:
"When you start community-building, what you need to be able to present is a plausible promise. Your program doesn't have to work particularly well. It can be crude, buggy, incomplete, and poorly documented. What it must not fail to do is (a) run, and (b) convince potential co-developers that it can be evolved into something really neat in the foreseeable future."
Eric Raymond is also the originator of the saying "given enough eyeballs, all bugs are shallow". Writing software doesn't start off with the perfect piece of code. It develops over time and iterates through many people reviewing, contributing, testing and correcting throughout the lifetime of the code. Everyone can contribute changes, individuals who have changes test their code to make sure it doesn't "break the build" and then submits the change file to a committer to review it and commit it to the code that makes up the application. These iterations continue on through various phases of the development. The phases include alpha, beta and everything in between. I raise these points now as these quotes from the Google developer accurately reflect the development perspective. 
We're not done yet, nor is it ready for the average user. It is, however, ready for those who want to live on the bleeding edge and help lend their talents towards completing it.
Another pillar of open source, along with releasing early, is releasing often. To that end, the dev channel will automatically receive weekly updates as development continues. You will be able to see the product improving from week to week and help immediately identify when things break. Getting feedback on new features as soon as they are completed helps the developers know if they hit the mark and helps close the feedback loop with the community. The community benefits by being more involved and connected and promoting further transparency in the development process. This wouldn't be possible if we only teased users with releases at widely-spaced intervals when most decisions had been set in stone (end-users who want that can use the beta or release channels).
Please join us here.
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Tuesday, June 09, 2009

A Roubini warning.

Click on the title of this entry to be taken to the Bloomberg "Editor's Pick" video page for a recent video of Nouriel Roubini. Bloomberg has changed their links in which to launch the default video player on your machine. I therefore don't know if the above link will work, if not please try to source the video from this web page. Additional information has been provided from this Wall Street Journal article picked up on Project Syndicate.

Professor Roubini has become famous over the past two years for correctly calling our current economic difficulties. His concern for the over-leverage of the shadow banking system pin points the root of the current difficulties. His remedies have to some extent been adopted globally and have caused the system to appear to recover. It is clear today that the perception that this nasty recession is over and the good times are just around the next corner. 

I have to agree with Professor Roubini that the complacency about our economy is dangerous. None of the remedies being prescribed in this Bloomberg video are in place today. None of the problems that lead to these difficulties have been solved. Roubini chases the issue back to the demise of Long Term Capital Management in the 1990's. This alone shows the extent of our problems. Too much money chasing too few opportunities are causing the bubbles and busts. So much of the world has been focused on housing, the most ineffective investment spending known to man-kind. As a result of this the complacency which Roubini speaks of, we have removed these difficult topics off the agenda. Leading us to fall into the same pit we appear to have just climbed out of.

The problem for us is that there are none of the tools that we used to get out of the pit the first time. We see the effectiveness of those tools in last weeks speech by Treasury Secretary Timothy Geithner; being laughed at when he says to the Chinese their foreign currency holdings are "very safe". The credibility of the U.S. as a reserve currency is in jeopardy and the Obama Nation has no understanding of the issue, its scope or what integrity means. As I write this I am learning that the Supreme Court has refused to hear the case of the bondholders in the Chrysler bankruptcy. I'd be interested in seeing how this plays out in the market tomorrow.  

I have reviewed the works of Professor Carlota Perez on this blog before. Selecting the Perez label from this blog will aggregate the 26 posts where I apply her long term economic research to this software development project. She predicted the demise of the old economy based on her research. Stating that the long term cycle was a constant in the world economy. Where the old ceases to provide the necessary value attribution and therefore systemically fails, to be replaced by the new based on newer technologies.  

People ask me why am I so pessimistic. And I have to answer that I am overly optimistic. The bureaucracy that runs our industries is incapable and unable to provide value for society. Today there is not much disagreement. If we take the point of view that the bureaucracy may be the main form of organization in 25 years, people definitely agree with me that it's days are numbered. So how do we make the change from the bureaucracy to the Joint Operating Committee, augmented with today's information technologies? The short answer is we can't.

We see the calling for radical change as a result of the bankruptcy of the auto industry and banks already fading from the urgent crisis driven thinking of just a few months ago. Organizations are about as static of a body as one could imagine. Without the crisis situation lasting the entire time to make the transition, no change management program will work. 

Unless Schumpeter's concept of Creative Destruction is allowed to eliminate the old from the marketplace, and the new is built up brick by brick and stick by stick, no wholesale organizational change can occur. The need for the people to make the decisions that GM, Chrysler, and the Banks are finished, and they don't appear to be able to make these tough decisions. The competitive marketplace remains depressed while the new fills the void. And for oil and gas that new is People, Ideas & Objects. 

Back to the issue of my optimism. It comes about as a result of the new organizations effectiveness. Firms born of the new organizational structures will provide real value to society. The current bureaucracies have been destroying value for over ten years, in my opinion. New organizations will provide a new and prosperous economy and quality of life for everyone. If only we could get rid of these dinosaur organizations.
For those that may want to dive deeper into the research I have conducted on this point. The Preliminary Research Report introduced the Cognitive and Motivational Paradox', and the Duality of Technologies. These define the theories that change is constrained by forces that are hard to resist. On one hand the Motivational Paradox precludes the adequate resources are committed to the change when production from the current system is necessary. The Cognitive Paradox involves the way people see new situations. Placing a filter of the old ways over what is new.
In order to eliminate these paradoxes from this software development project. We need to walk a fine line. Ensuring that there is a break between the old and the new in order to maintain the appropriate focus on the tasks at hand. 

Not to go into too much detail but one of the key tools for eliminating the paradox is the vision of the system as detailed in the Draft Specification. The natural form of organization in the oil and gas industry is the JOC. In the past people had to interpret the transaction from the JOC to the bureaucracy and systems they operated within. With People, Ideas & Object the system interprets the business in the way that people understand the business, through the Joint Operating Committee. Therefore what the user will be able to do with People, Ideas & Objects is think more naturally then they do in their day to day activities today. 

The use of the economic changes and the move to a more natural way of working within the oil and gas industry are the two ways that I have chosen to fight these two well understood paradox'. Please, join us here.

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Monday, June 08, 2009

McKinsey on Risk

McKinsey Consulting are providing a 14 minute video of Peter L. Bernstein talking about risk. This is a fascinating and valuable video that I promise you will learn one or two things about risk. It's unfortunate that the video marks the passing of Mr. Bernstein, but I have put his book "Against the Gods: The Remarkable Story of Risk" in my library.



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Friday, June 05, 2009

What's holding the project back?

Well there is that budget. We currently stand with no commitments to proceed with the development of these applications. I have established December 31, 2009 as the start date for the Preliminary Specification, however, this will be delayed if the funds are not secured by September 30, 2009. Delayed for approximately one year, or the end of 2010. I see the producers, and particularly ExxonMobil, Shell, BP and Chevron having a role and responsibility to ensure this project does not get delayed any further. I will continue to impress upon them, and other producers, that they have the most to lose and the most to win in the new energy era.
 
The budget has been set for the Preliminary Specification at $30 million. This represents 30% of the study or definition phase of the project and 3% of the proposed preliminary budget of $1 billion. Companies may argue that these costs are too prohibitive. I would point them to the People, Ideas & Objects business modeland value proposition to show them how these costs are actually the least expensive IT expenses they've faced in many years. I would then ask them how efficient are their organizations today. Give them a copy of Adam Smiths "The Wealth of Nations" and highlight the division of labor and specialization theories. And lastly ask them how, in the near future, are the most efficient organizations going to spontaneously appear in a global economy?
 
Tying together the role and responsibilities with the budget needs is the plain hard facts. If we want to skip portions of the Preliminary Specification, then we can increase the overall developments time, accuracy and costs to accommodate that. The point being the most effective time and energy to get it right is at the beginning. Skimping on the costs here is the wrong direction to take. And what are we talking about, if we were to source funds from only the four companies mentioned this would be a one time cost of $7.5 million each.
 
And for that there is no guarantee. If we subsequently choose to travel further down the development road. The value for these producers will exist in the applications ability to meet their unique organizations needs and asset requirements. What I am saying is, the onus falls on the producer firms that commit to this project; to not limit their contribution just to capital. The effort and understanding of their operations must be represented and operational within the finished software. I see this responsibility being the subscribing producers as much as it is the user groups. Success will be a matter of the collective will of many people. Please join us here.
 

Thursday, June 04, 2009

Exxon's Annual Meeting.

On MasterResource, "a free market energy blog", the author Robert Bradley has a summary of the ExxonMobil Annual Meeting. First of all it is satisfying to see an energy company that doesn't indulge in the politics of climate change or the folly of alternative forms of energy. Those within the industry that are in the know, know that the exploration and development business has entered a more scientific level of complexity.


The metrics of success and failure in the oil and gas industry have therefore changed. Metrics that will determine the winners and losers on a far different basis then the metrics that brought the industry leaders to their lofty heights. ExxonMobil's, BP's, Shell's and Chevrons. The Draft Specification is based on the understanding that I gained from over 30 years of oil and gas experience, the research into innovation and organizations that has been published on this blog, and a passion for Information Technologies.

If we approach the energy problems that we have today with yesterdays organizations and approach. Then it is reasonable that we will fail in this "new" business. If however, we understand that software defines and supports the organizations, then we need to build a software application that will enable the oil and gas producer to achieve the speed and innovativeness necessary to continue to succeed in this business.

I find ExxonMobil's CEO Rex Tillerson's comments in the Annual General Meeting refreshing. Comments that reflect his concern, focus and understanding of the energy business is consistent with the Draft Specification.

Comments such as;
Petroleum as a primary energy source is the future, not only the recent past. (Comment: renewable energies once had a 100% market share, corresponding to mankind’s energy poverty era.)
Although renewables and alternatives are growing, their overall piece of the energy mix will remain small until they reach the massive scale at which fossil fuels are used. And Exxon won’t invest beyond research until renewables are profitable without subsidies, Tillerson said.
The situation before all of us is very difficult. The solution starts with action, action by individuals who join this user group, and producers such as those mentioned in this article, working together to solve these problems. On a related note I am reminded of Ray Kurzweil's comments of how we solve large problems through exponential developments. Please join us here.

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Tuesday, June 02, 2009

Google's Wave

With Google Wave I think we have a clear direction where the future of Information Technology is headed. There is an hour and twenty minute video of the Google Developers Conference announcement of their Wave product. Although it is early, I do not see to many hurdles to having the product shipping. Clearly the technology is not the key attribute of the value of the Wave product, its the implementation.

Lets quickly dispatch the techno speak with this one paragraph. Wave is open source, Java and uses the Google Web Toolkit. (Renders browser based code from Java.) All within the technology stack used by People, Ideas & Objects. The one technology that is not available is the W3C's HTML 5. I do not foresee HTML 5 having too much difficulty in being implemented quickly. HTML 5 provides some persistent data storage which is provided by the able Google Gears in the product demonstration.

So why is Google Wave an important technology for users and producers of People, Ideas & Objects. I will be augmenting the Draft Specification to include the video and this text. If we go back through this blog and the ideas that were used to build the Draft Specification. We focus on three key areas and some minor additional points. The three key areas in descending order of relevance are the Accounting Voucher Module, Military Command & Control Metaphor and Security & Access Control Module.

Recall in the Accounting Voucher we are capturing the changes in the business on a month to month basis. As "things" happen they are captured and recorded in the Accounting Voucher for future use. If this isn't making any sense then please review the Accounting Voucher part of the Draft Specification to better understand what it is that I am saying. The accounting changes that are captured in the Voucher are the discussions, documents and decisions that are made. The Accounting Voucher is capturing and recording the financial impact of these changes. It is the Google Wave infrastructure that we inherit, by using its open source code, and enhance it to incorporate the ability to capture these financial changes.

As the video reflects, we acquire these in a unique interface provided by Google. Representatives of the various producers on the Joint Operating Committee (JOC) interact on the topics of interest in the JOC. These are in documents, asynchronous communication, synchronous communications and in all the media available. The mode of these interactions are person to person, person to process, process to person and process to process as I noted in the Preliminary Research Report. A rich environment that provides the media, mode and method of communications that are necessary to support the innovative oil and gas producer.

The Military Command & Control Metaphor is used throughout the Draft Specification as the means to provide the dynamic resources provided by the producer members of the JOC. Much as the pooling of military resources is done by the NATO forces, the People, Ideas & Objects application is able to dynamically assign the corporate governance, authority, role and responsibility necessary to efficiently and innovatively manage the Joint Account. This Metaphor is used throughout the application, but most importantly one that controls the interaction of the communication and documentation contained within the Google Wave open sourced code.

Lastly I want to reiterate the importance of the Security & Access Control Modules use of Sun Microsystems Federated Identity software as the means to ensure these corporate governance needs are maintained in such a dynamic manner. I would encourage readers to spend some time in these elements of the People, Ideas & Objects application. It is an area that I think the innovation could and will prosper and is ripe for the users to exploit for their advantage; and please join us here.

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Sunday, May 31, 2009

Changes at Shell.

A number of articles are appearing about the announced changes at Shell. A new CEO Peter Voser takes over July 1, 2009 and has announced a major overhaul of the firms operations. Fox notes:
Oil giant Royal Dutch Shell on Wednesday announced a series of changes to senior management roles and responsibilities, which it said were aimed at creating a sharper focus on operating performance and technology.
I interpret these changes as an admission that the engineering and earth sciences necessary for each barrel of oil produced are increasing. The Calgary Herald reported that Voser said:
"Organisationally, we are too complex, and our culture is still too consensus-oriented. Our costs are simply too high," Voser said in an email to staff, excerpts of which were seen by Reuters.
Details of the changes include the consolidation of divisions into operating units around geographical locations. North America being one in which I would assume Houston will take the lead role in. It is also reported that many lay offs will occur throughout the company. 
The Calgary Herald notes many of the differences between Shell, Exxon and BP's announced reorganizations. These are all ongoing and reflect different characteristics and management styles. 
Exxon is renowned within the industry for its strict management practices and insisting employees do not deviate from standard operating procedures. BP, on the other hand, had a risk-taking culture that allowed considerable freedom to managers of units or fields, and Shell had a culture of making decisions by consensus.
What does People, Ideas & Objects offer firms such as Shell, Exxon and BP.
It's interesting the three methods that are used by Exxon (Strict Management Practices), Shell (Consensus) and BP (Risk Oriented.) Neither of these management practices or strategies are precluded in the People, Ideas & Objects. It is very clear that a unique strategic identity is enabled in each producer through this system. This also does not preclude a strong governance structure. With the reduction of the hierarchy an alternate form is required and one has been developed. That is the Military Command & Control Metaphor used within the Joint Operating Committee affording the pooling of resources and reducing the redundant capabilities built within each silo'd oil and gas firm. 

Lastly I would point to how this project is a commercially viable one by pointing out the business model of People, Ideas & Objects and the Community of Independent Service Providers. And the Technical Vision  of where the Information Technologies promise the greatest value and how this product is supported technically. 

These firms are a part of the global oil and gas industry and therefore part of the focus of this development. I encourage you to forward this post to the people you know at Shell, Exxon or BP and have them read for themselves what is possible. I would also encourage you to get involved in moving this vision forward by joining in this process

Saturday, May 30, 2009

For the last time. 

This royalty "debate" in Alberta has to stop. We consistently are told by the Calgary Herald, who for some reason are beholden to the venture capital groups, that the Provinces royalty regime is the reason for the economic difficulties. Are we to assume then, that the Alberta Governments royalty regime is the source of the global meltdown. 

The issue is there's money on the table. Billions and it belongs to the resource owners, the people of Alberta. It goes back to the battle of Alberta in 1972. Our Premier Peter Loughheed was not going to allow the Federal government, represented by Canada's version of Obama, Pierre Trudeau to abscond with the resources that belonged to the people of Alberta. Trudeau mania, as the Obama nation will do for the U.S., destroyed Canada. Loughheed was successful and the bitter Trudeau in retaliation changed the tax laws to disallow Alberta royalty payments as deductions from income taxes. Never before has a tax been implemented is such an unfair and unreasonable basis. 

Fast forward to today, our new Prime Minister Stephen Harper from Calgary quietly reversed this injustice two years ago. The tax deduct-ability of Alberta Royalties was brought back in line with all other industries and jurisdictions. Therefore creating a huge after tax benefit for the producers. What is not remembered is that the Alberta government had to reduce their royalty take in order to remain competitive in the industry. Not reducing the royalty take would have left Alberta a ghost town.

Enter the 1980's and Trudeau is up to no good again. This time implementing the national energy program. This much hated program disallowed producers from selling their production at world prices, and received a regulated price dictated by Ottawa. A wellhead tax of 12% and the discriminatory ownership rules that disallowed anyone but Canadians owning oil and gas producers. Lougheed countered this, again, with the Alberta Government granting up to 35% of capital costs to producers that remained active. This also stopped the province from housing only ghost towns. 

In the 1990's we found ourselves in debt and had a budget deficit of mammoth proportions. Our new Premier Ralph Klein implemented an austerity program that enabled us to live with in our means and indeed reduce our debt. Note at no time were the producers subjected to any changes in the royalty framework or taxes in order to balance the budget. This was done on the back of taxpayers who went without education and health benefits. Civil servants by the truck load were laid-off and eventually the government finances recovered. 

In this past decade the province has prospered due to their fiscal house being in order. We became debt free and were the benefactors of an appropriate fiscal discipline and increasing energy prices. What throughout this period back to the 1970's provided was a stable royalty regime for the industry that existed since 1972. My math may fail me but that is 37 years ago. Has the industry changed? Does the Alberta government have to keep its hands off the windfall the producers are realizing from the federal tax changes? I wouldn't think so either. 

What the Calgary Herald seems to be unable to comprehend is the royalties are the fair value consideration the producer pays to earn title to the product. It is not a tax. Royalties belong to the people of Alberta and the producer must purchase those commodities from the people of Alberta. The Alberta Government acts as an intermediary to administer and distribute this value back to the rightful owners. I have repeatedly made comments to the Calgary Herald over the past year about these points and have never seen any of these facts appear in the paper. I find it ironic and typical of the Herald is not permitting any comments on this point in today's' on-line version. 

The Canadian Association of Petroleum Producers have been running this campaign for the industry. Recent defections of their members are showing that cracks are appearing in this facade. Husky and Paramount have both ceased to be members of the association. It is not clear why they declined their membership, but the "rumor" is it's over the handling of this royalty situation. Paramount' founder and leader is on record as saying the royalty changes are positive. Therefore, I think the Calgary Herald, who are soon to meet the great printing press in the sky, will have the Calgary people cheering their demise for their representing only CAPP's point of view to the real owners of the oil and gas resources. 

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Friday, May 29, 2009

Sources and costs of energy.

Reason Magazine have published a summary of the various costs, advantages and disadvantages of the various forms of energy. This summary is very educational and shows in stark terms the energy problems we face. It makes it clear where we should putting our capital and our efforts. It also shows that when man attempts to best mother nature, it usually turns out bad. Have a look here.

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Wednesday, May 27, 2009

Welcoming Jeff Rubin to the club.

Today's Calgary Herald has an article on Jeff Rubin former Chief Economist and Strategist at CIBC World Markets. He has been prescient in his predictions of oil prices over the last two years. Accurately predicting both the rise and recent fall in the prices. The statement that he makes is as follows:

Everything we have taken for granted is about to change. Our cars, our homes, our whole world has been getting bigger in the cheap-oil era. Now it is about to get smaller - and, greener. Much greener.
Rubin's problems, and his joining the "club", is as a result of the recent publication of his book.
Why Your World is About to Get a Whole Lot Smaller: Oil and the end of globalization. 
Seems his employer didn't want to have anything to do with the book!
Rubin, who spent 20 years at the Canadian Imperial Bank of Commerce unit, said he quit to publish his book after the Bay Street firm didn't want to be associated with it. 
I went through the same process in May 2004 when I published the Preliminary Research Report. The report that is the basis of this software development project; and is where it was proven the Joint Operating Committee is the natural form of organization for the innovative oil and gas producer. As a result of the publication of this report, I have not worked in the oil and gas industry for five years. I know what it's like to be ostracized for your ideas. It's not the most enjoyable process, it is however, very liberating. 

As more voices start down the difficult road that I, and now Jeff Rubin have taken. It's important that the people who join this development are not subjected to this archaic and destructive process at the hands of the vested interests. I have set up the system here in such a way that the only way your employer can know you are participating in this development, is that they are here too. So please follow this process and join us here

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